Japan pharma to grow at 2% CAGR from 2013-20

A total of 6,756 medicines were approved in 2011, of which 3,614 were prescription drugs, 1,031 were OTC drugs, 173 were In Vitro Diagnostics (IVDs), and 1,938 were quasi-drugs (PMDA, 2013).

Additionally, in 2012, the elderly population of Japan accounted for 24.2 percent of the overall population (IPSS, 2012), moreover, it is estimated that by 2050, this population pool would account for 38.8 percent of the overall population (Statistics Bureau, 2012). Japan's elderly population is growing at a faster rate than that of the US and Europe. Improving healthcare facilities and strong financial support for the elderly have accounted for a higher life expectancy in Japan. The growing elderly population and the associated disease burden further contribute to the growth.

In order to reduce the healthcare expenditure, the government is promoting the use of generics as a cost-containment tool. In 2007, generic drugs accounted for 18.7 percent of the pharmaceutical market in terms of volume, which increased to approximately 28.7 percent in 2012. The government is strictly regulating pricing policies through biennial pricing reviews, reference pricing, and comparator pricing. Increasing generic substitution and biennial pricing reviews restrict the quantum of growth of the pharmaceutical market.

The medical device market was worth approximately $46.8 billion in 2012 and is projected to reach approximately $73.9 billion by 2020 at a projected CAGR of 6 percent. Ophthalmic devices (14.8 percent), IVD (10.5 percent), and cardiovascular devices (9.4 percent) were the major segments in 2012. In 2008, the government, in its basic policies for economic and financial reform, announced an action program for the faster evaluation of medical devices, with the aim of increasing foreign investment.